Energy Future Files for Bankruptcy, Some Second Liens Not on Board

Energy Future Holdings Corp. filed for Chapter 11 bankruptcy Tuesday, after reaching a deal with creditors on the terms of a debt-for-equity swap to restructure the private-equity backed utility’s debt load of more than $49 billion.

With $36.45 billion in assets and $49.7 billion in debt, Energy Future’s bankruptcy ranks as the 10th biggest in U.S. history. Read Energy Future’s bankruptcy petition and the list of its 50 largest unsecured creditors here.

But not everyone is on board with the restructuring of the busted leveraged buyout. Second-lien debtholders are already petitioning Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., for authority to probe what they call the “historic and ongoing mismanagement” of the company and a restructuring deal that they claim benefits the Texas utility’s senior lenders at their expense. Read the second-liens’ request here.

The second-liens also want the Dallas-based company’s bankruptcy case transferred to Texas, a move that Energy Future spokesman Allan Koenig says is unnecessary.

“Delaware is an appropriate venue for a Chapter 11 filing such as ours, which is focused on our balance sheet,” said Mr. Koenig.

A number of big Texas-based companies—among them baseball’s Texas Rangers, hockey’s Dallas Stars and American Airlines—have restructured in bankruptcy court outside the state.

Write to Patrick Fitzgerald at [email protected]. Follow him on Twitter at@PatFitzgerald23.

Correction: An earlier version of this article misstated Energy Future’s name in the headline.